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Question about the 4 tax options under settings > taxes > tax calculations

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VarkaTech
New Member
2 0 1

Can someone please give me an explanation as to what these 4 options do?
I think I have a general idea, but i'd like to understand practical real-world application of these 4 checkable boxes.

Accepted Solution (1)

Accepted Solutions
Victor
Shopify Staff
Shopify Staff
1586 151 353

This is an accepted solution.

Hi @VarkaTech,

Thank you for getting in touch. I believe you are referring to these four check-boxes shown below:

24-52-92824-54843

I'd be happy to provide more information on each one.

All prices include tax

This option dictates whether or not the prices you enter in for your products are tax-inclusive or tax-exclusive. As an example, prices for products in the UK are typically displayed with sales tax (VAT) included, so merchants based in the UK would likely want to check this box, whereas merchants based in the USA would likely want this box to be unchecked, as prices in the United States are usually shown without sales tax included and are instead added on at checkout. You can read more on this setting here.

Include or exclude tax based on your customer's country

After deciding whether you want to include or exclude taxes in your product prices, you can then decide whether you want to include or exclude them based on your customer's country. Following the example above, there may be a UK merchant who needs taxes included in their prices when selling domestically, but does not want international customers to pay the full tax-inclusive price if they are selling to a region or country where they are not required to charge taxes. This then allows customers in places where the merchant does not charge sales tax to pay cheaper, tax-exclusive prices, whilst their customers in the UK still pay the full tax-inclusive rate. A breakdown of how this feature works can be found here.

Charge tax on shipping rates

Checking this option allows you to charge taxes on shipping rates if that is something you believe you are required to do. This option should only be used if you are outside of the USA, Canada, UK, or the European Union, as for these countries and regions taxes are charged on shipping automatically if it's required.

Charge VAT on digital goods

This option is mainly applicable to businesses selling into the European Union, as customers in EU countries are required to pay VAT on digital goods  at the rate that applies in their own country, regardless of where the seller is located. I would recommend checking out our guide on this if you are selling digital goods, as it goes into more detail about how and when this feature should be enabled.

I hope I have been able to clarify all of these tax options for you and what they mean, but please let me know if you have any further questions.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

View solution in original post

Replies 3 (3)
Victor
Shopify Staff
Shopify Staff
1586 151 353

This is an accepted solution.

Hi @VarkaTech,

Thank you for getting in touch. I believe you are referring to these four check-boxes shown below:

24-52-92824-54843

I'd be happy to provide more information on each one.

All prices include tax

This option dictates whether or not the prices you enter in for your products are tax-inclusive or tax-exclusive. As an example, prices for products in the UK are typically displayed with sales tax (VAT) included, so merchants based in the UK would likely want to check this box, whereas merchants based in the USA would likely want this box to be unchecked, as prices in the United States are usually shown without sales tax included and are instead added on at checkout. You can read more on this setting here.

Include or exclude tax based on your customer's country

After deciding whether you want to include or exclude taxes in your product prices, you can then decide whether you want to include or exclude them based on your customer's country. Following the example above, there may be a UK merchant who needs taxes included in their prices when selling domestically, but does not want international customers to pay the full tax-inclusive price if they are selling to a region or country where they are not required to charge taxes. This then allows customers in places where the merchant does not charge sales tax to pay cheaper, tax-exclusive prices, whilst their customers in the UK still pay the full tax-inclusive rate. A breakdown of how this feature works can be found here.

Charge tax on shipping rates

Checking this option allows you to charge taxes on shipping rates if that is something you believe you are required to do. This option should only be used if you are outside of the USA, Canada, UK, or the European Union, as for these countries and regions taxes are charged on shipping automatically if it's required.

Charge VAT on digital goods

This option is mainly applicable to businesses selling into the European Union, as customers in EU countries are required to pay VAT on digital goods  at the rate that applies in their own country, regardless of where the seller is located. I would recommend checking out our guide on this if you are selling digital goods, as it goes into more detail about how and when this feature should be enabled.

I hope I have been able to clarify all of these tax options for you and what they mean, but please let me know if you have any further questions.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

VarkaTech
New Member
2 0 1

Phenomenal answer, this is exactly what I needed. Thank you 🙂

Victor
Shopify Staff
Shopify Staff
1586 151 353

Hi @VarkaTech,

No problem at all, and I'm glad it helped. Please reach out again if you've any further questions.

Kind regards,

Victor | Shopify Social Care

Victor | Social Care @ Shopify 
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog